Naira Depreciates at Investors, Exporters FX Window
Nigerian naira continues its rough ride in the New Year as the local currency depreciates to N461.67 against the United States dollar from N461 at the Investors and Exporters foreign exchange (FX) window.
Foreign exchange market data show that volume of dollar transacted declined 54.82 percent to $69.33 million on Wednesday from $153.45 million recorded on Tuesday.
Analysts hint that most of the currency dealers who participated in the foreign currencies auction on Wednesday maintained bids between N440.00 and N462.00 per United States dollar.
In the parallel market where the local currency is freely trading, exchange rate worsened to N740 per greenback from N730 while local banks announced an end to $20 monthly spend via debit cards for their customers. >>Naira Reclaims Value after Banks Update on FX
In the New Year, there will be a rush to FX market to obtain dollar for foreign school fees payment and other invisibles despite a run on external reserves which printed at $37 billion. >>Naira Appreciates as Dollar Inflows Improve, FX Gap Collapses
Market expectation for 2023 is that naira will be devalued as the local currency is trading above its fair value. Bank of America said late in 2022 that the Nigerian naira is 20% above its real value.
Broadstreet analysts remained firm that the apex bank will be forced to do the needful amidst foreign currencies scarcity and lower inflows into the Africa’s most populous nation with estimated gross domestic product (GDP) of about $500 billion.
The monetary authority has not longer plan for the naira, analysts told MarketForces Africa, saying the apex bank will more likely succumb to market dictate and devalue naira near its real value.
Unfortunately, devaluation will only drive hot monies into the nation but cost of living and real economic performance will be hit faster, and harder, MarketForces Africa gathered from academic community who think economic reform should take precedence.
“Devaluation of the Nigerian naira will be useless after all if there is no solid production based and increase economic activities to end large imports and create balance between supply and demand for foreign currencies”, MarketForces Africa gathered from economists who preferred not to be named.
In 2022, Nigerian naira lost 11% at the investors and exporters FX window despite the apex bank’s series of plan to drive dollar into the local economy via incentives.
Naira exchange rate in the parallel market continue to working against its rebates on FX inflow as exporters preferred higher rates for conversion. # Naira Depreciates at Investors, Exporters FX Window
